Daily Times

At a recent pre-sehri coffee get-together — that and having sehri in a restaurant is the current fad in the metropolis — the conclusion with complete sang-froid was that “things” would continue the way they are, nothing would change. Admittedly, not a very positive or even meaningful closure after a few hours of coffee and cookies; in fact, the consensus verges on depressively hopeless, all the more considering that a cross section of intelligentsia, in the real sense, was represented at the gathering.

But unfortunately, for the anti-democracy camp, which currently has only one member amongst the entire civic society that I know off, this is a pyrrhic victory. Albeit the democracy camp will continue to stubbornly and obstinately berate the claim, and scream: what victory? This flumadiddle has to stop. But when the political elite cannot even agree on Pakistan’s biggest problem, and they have a bunch of them to choose from, or believe that anything can change, then is it not a told-you-so-while-twirling-the-moustache moment for the anti-democrats?

Get the champions of democracy together and ask them who they will vote for come elections. And assume for a brief moment — irrespective that the assumption is an absolute fantasy — that the educated elite gets to decide who comes to power. A logical course of action will be to elect the party whose manifesto best addresses the numero uno problem of Pakistan. So what is it? Corruption, all the more due to Panama papers; foreign policy now that we are at daggers drawn with almost all our neighbours; 22 trillion rupees of debt; or education, which is the future of Pakistan. There is a joke amongst corporate circles that when you don’t want anything done, form a committee and they will discuss the issue to death.

Let me assure you that the democracy camp will not even be able to agree on what should be the first priority of the government, let alone getting around to analysing party manifestos; and unfortunately, this story does not end on the macro issues enumerated above. A few days ago, there was horrific news on the idiot box about a young man protesting by sealing his lips with wire because he was not being paid by the Pakistan Steel Mills (PSM) the retirement benefits of his father who had passed away. As is generally the case with the electronic media, there wasn’t any follow-up on whatever happened to the poor man, and one can only pray that things worked out for the better. But why was the PSM not paying his father’s dues? Is not retirement benefit funds required to be kept in a separate account? In the absence of complete details, it can only be pure conjecture that there was no money in the PSM kitty to meet this obligation.

This raises another frightening issue. The poor father worked all his life to support his family, and would have been confident that he had saved enough in his retirement benefits to look after his family even when he was not there, and now suddenly there was absolutely nothing. This brings us to the title of today’s write-up, which was conceived curtsey an article on the web about a grasshopper nation who is not saving for the future. Surely, the older generation will recall the fable of “The Ant and The Grasshopper.” I’m not entirely sure whether it is currently part of children’s syllabus, ironic, if it is not. Aesop’s fables date back a few centuries BCE, and if they have survived this long then there must be a reason.

To recall, and for those who are not privy to the fable: as the story goes the grasshopper is dancing in the summer while the ants are busy at work storing food for the dreaded winter. When the cold season comes, the grasshopper can’t find food anywhere and begs the ants for some food. The ants refuse, and sarcastically advise him to try dancing away the winter; obviously, that doesn’t work and the grasshopper is no more. The self-proclaimed bastions of morality might have another version of how the story should end, in which the ants are probably hanged for murdering the poor grasshopper, but the true moral of the story is about the virtues of hard work and more, planning for the future.

Generally Pakistanis are conscientious about the future, at least the older generations, and have a tendency to put aside some funds for rainy days, retirement benefits being one option and national savings another. The news above already gives an idea about what could go wrong with the former form of savings, but how secure is the latter.

The way government accounting works, amounts invested in national savings are a capital receipt, which after paying for interest on such schemes during the year and amounts withdrawn from the schemes are used for government expenditure; they are not kept in a separate account or invested separately. Frankly, if one didn’t know better, this format is quite similar to a legalised Ponzi scheme, and I don’t know better. In theory, since the government does not have these funds saved separately for a rainy day, if in a year there were fewer saving and more withdrawals, government will be up the creek without a paddle.

Regarding the pension obligation of government to its retired public servants, including military personnel, it is treated as current expenditure and is paid out of current year’s tax collections. Obviously both the accounting treatments are not unique to Pakistan; every government across the globe does it, but where a country acts like a grasshopper the risks multiply.

And how does a government emulate a grasshopper? By the amount of debt that it contracts. Pakistan’s total debt is touching 22 trillion rupees. By the way, the debt-to-GDP indicator isn’t what it is made out to be; it is the capacity to meet current debt obligations, which are crucial in determining how much a nation should borrow. Since a lot more space is required to explain this assertion, readers are requested to accept this as a truism for the moment, with a promise to explain this in a later article, probably after Ramazan.

Annual increases in debt, and that too significantly, suggests that government is spending way beyond its means, and hence definitely not saving for the winter. There was time, a few decades ago, when government ran a campaign to advise the masses to save today — the advice, implicit or explicit is to borrow and buy a bigger car. The current and once again global mantra is to consume more because it is good for a national economy. How can it be?

It just makes no sense; in substance we are borrowing from our children’s future, and as individuals which rational parent would lead a lavish life and let his children worry about paying off the debts? If it does not work for us as an individual how is that right for us as a nation. Unfortunately, the party will not go on endlessly; austerity is around the corner, and forced austerity will always be extremely painful, especially for the poor of society. We definitely need to start searching for ants amongst the ruling elite.

The writer is a chartered accountant based in Islamabad, and can be reached at syed.bakhtiyarkazmi@gmail.com